Where’s the Beef? The Future of Alternative Meat Products

The market for alternative meat products is large, growing, and becoming more complex. Because the products are sold directly as well as through the food service channel – which is very opaque – it’s hard to arrive at a precise figure for the market’s current size. I’d put it at about $1.2 billion, and easily set to double by the end of 2021 or early 2022.

The market has changed so much in a very short time. If 2018 was the year of the plant-based or alternative beef burger, then 2019 was the year of expansion into other forms of beef. It seems that 2020 and beyond will be about seafood, poultry, and pork, as well as other forms of protein.

At the moment, alternative meat appeals most to environmentally conscious consumers who are concerned about sustainability and the impact of beef production. Gen Z certainly approaches the issue that way. But there’s also a swell of consumer demand based on the health aspects of alternative meat. Boomers see it that way, as do millennials, especially millennial moms, who want their children to eat wholesome food that contains no antibiotics or hormones. We’re going to see the “veggie” come back to veggie burgers, as well as several other likely developments.

More Internationalization on the Way

Over the next few years, we’re going to see greater internationalization of food production and distribution as a result of the growth of alternative meat, with probably greater penetration of the U.S. market by European producers. One reason for that is because some U.S. producers use genetically modified wheat, corn, or soy, which poses a barrier to entry into the European Union and Russia. But the big international play will be in Asia and the Middle East.

It also will be interesting to see how U.S. companies deal with alternative meat in international markets. Burger King, for example, chose Impossible Foods in the U.S. but chose other companies in South America and Europe. McDonald’s has the Nestlé burger in Germany and is testing Beyond Meat in Canada. From a sustainability standpoint, it certainly makes sense for these chains to go with a supplier who can produce the product nearer to the restaurant company’s supply chain and logistics teams. We’ll probably see an increase across the board. both international companies becoming involved and an increase in local alternative meat production.

Greater Breadth and Depth of Product Offerings

As the market grows, we’re going to see companies both offer a wider variety of alternative meat products and try to get a greater share in the core ground beef market, which is approximately $3 trillion in size.

Beyond Meat’s partnership strategy is an example of the success of doing both at the same time. The company is now providing the sausage patty for Dunkin’ while simultaneously expanding the sales of its ground beef alternative to restaurants. It started with TGI Fridays and now sells to Carl’s Jr.

Tacos and spaghetti sauce offer a lot of opportunity, and a big opportunity will likely come with a pork alternative. It’s the nearest to beef in how it’s used, especially as they’re both used  in minced meat applications. Considering the Asian swine flu epidemic, there is global demand for pork products.

Changes at the Supermarket

When we leave the food service and restaurant world, we arrive at supermarket shelves. And that’s where I see a big change coming. The big challenge regarding expansion in the grocery space is that alternative meats are predominantly frozen and frozen space in retail is very expensive and finite.

Alternative meat is now moving into refrigerated space, and that creates opportunities. Some retailers have created a kind of protein oasis in their stores. No matter what kind of protein you want, it would all be together.

While much of the buzz around alternative meat has come from developments on the food service side, it’s important to remember that the market for food is roughly evenly split between food service and supermarkets. If the economy turns and consumers stop eating out because they’re worried about their pocketbooks, alternative meat producers who don’t have a strong retail play may really be in trouble.

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About the Author
Stephanie Lind is Founder of Elohi Strategic Advisors, where she consults for small and large emerging brands in the foodservice space in the following areas: category management, sales and supply chain strategy, and targeted talent search (2015-Present).

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This article is adapted from the GLG Teleconference, Beyond Meat: Roadmap for Top Alternative Meat Players. If you would like access to this teleconference or would like to speak with Stephanie, or any of our more than 700,000 experts, contact us.